Saturday, January 23, 2010

House panel slams A-I, IA merger

[This news describes how government has intentionally  made Air India, a nationalized company sick.]

NEW DELHI, 21 JAN: While recommending that the government write off losses suffered by Air India, a Parliamentary committee has asked for an inquiry into “faulty decisions” taken by the national carrier’s management, which have resulted in tremendous losses to it.
Pointing to numerous "irrational and misplaced" policy decisions, including surrender of lucrative routes to favour private players, the chairman of the 31-member committee, Mr Sitaram Yechury, said those who took these faulty decisions should be made accountable.
The panel was of the firm view that NACIL’s turnaround was “not possible by shifting the burden of the crisis on to the shoulder of the employees and blaming them for the ills of the company”.
It, therefore, has recommended that as a first step the government should write off the entire loss suffered by NACIL as the loss was due to the policy directions of the civil aviation ministry.
The only way of overcoming the problem is to change the often irrational and misplaced policy decisions of the government, the committee declared, in its report on the merger of Indian Airlines and Air India (in March 2007).
It noted that Air India dry leased four Boeing 777s for five years in 2006 whereas it was to get the delivery of its own aircraft from July 2007 onwards. “As a result, five Boeing 777s and 737s (each) were kept idle on the ground at an estimated loss of Rs 840 crore between 2007 and 2009,” it said. It recommended review of all lease agreements.
The panel found that services were being withdrawn from lucrative sectors by Air India’s holding company, National Aviation Company of India Ltd (NACIL), paving the way for introduction of services by private operators in the same sector. Expressing apprehension about a “possible nexus” operating to favour the private players, the committee has recommended a probe to analyse the withdrawal of lucrative routes both domestic and international to favour private players. It also recommended the creation of “an independent regulatory authority” to regulate the allotment of routes, bilaterals, social commitment of private players and operations on non-viable routes.
The committee said the merger between the two national carriers was taken in haste, without required homework and consultations due to which the entire process has been unduly delayed.
“In the process, it has given rise to so many problems concerning financial, administrative and operational, which could not be foreseen by the people who took this decision,” the committee said.
It also recommended that NACIL, which now runs the merged entity, should be converted into a holding company with NACIL-A and NACIL-I as “separate functional units”. ;SNS

Source: The Statesman 2 January 2010

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